Passionate about IP! Since June 2003 the IPKat has covered copyright, patent, trade mark, info-tech, privacy and confidentiality issues from a mainly UK and European perspective. The team is Neil J. Wilkof, Annsley Merelle Ward, Nicola Searle, Eleonora Rosati, and Merpel, with contributions from Mark Schweizer. Read, post comments and participate! E-mail the Kats here

The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Wednesday, 13 December 2017

There was a major development last week in the saga of the suspension of the member of the Boards of Appeal of the European Patent Office, which, however, still has failed to bring the affair to a conclusion.

To recap the tale which has been dragging on for three years now, a member of the Boards of Appeal was suspended in December 2014 by the President of the European Patent Office, M. Battistelli, pending investigation of various allegations, including dissemination of defamatory material. This caused an outcry, because it is not the President, but the Administrative Council, that has disciplinary supervision over Board of Appeal members. The Administrative Council however confirmed the suspension, and then in October 2015 additionally decided to reduce his salary by half.

The IPKat, in common with most news sources, has up until now not named the Board of Appeal member concerned, although the EPO briefed his nationality some time ago, enabling his identification as Patrick Corcoran – who was apparently the only Irish member of the Boards of Appeal. This has now been widely reported, and so the IPKat sees no need to continue with the anonymity.

Mr Corcoran requested a review of both the original suspension decision, and of the decision to reduce his pay. Both requests were rejected, and these rejections were appealed to the Administrative Tribunal of the International Labour Organisation (available here). The ILO-AT is the only body competent to hear employment disputes from the EPO, which, as an international organisation, is generally exempt from national jurisdiction. Partly because of the large number of the EPO-related cases, the ILO-AT has a huge backlog, and so can take many years to reach decisions.

It was therefore rather surprising that last week the ILO-AT released its decisions relating to the two suspension decisions taken by the Administrative Council (here and here).

The decisions are in substance very similar, and are worth reading in full. Operating on principles of procedural economy, the ILO-AT has only ruled on matters sufficient to dispose of the cases. Therefore, while taking no decision in relation to many of the aspects raised, the ILO-AT has considered that the decisions taken by the Administrative Council were fundamentally flawed, because they were based on an Opinion prepared by the President of the EPO, pursuant to Article 18(1) of the Rules of Procedure of the Administrative Council. However, since M. Battistelli was one of the people allegedly defamed by Mr Corcoran, he had a conflict of interest in the matter, according to the ILO-AT, and should not have been involved in the disciplinary proceedings.

The ILO-AT therefore concluded:

“In the present case, there is a conflict of interest on the part of the President. It stems from the fact that the alleged serious misconduct, with which the complainant was charged, might reasonably be thought to have offended the President specifically, directly and individually. This situation, by itself, casts doubts on the President’s impartiality. Considering the whole situation, a reasonable person would think that the President would not bring a detached, impartial mind to the issues involved. The argument raised by the President in his opinion to the Council (CA/C 6/15), quoted above, namely that pursuant to the applicable rules the President was acting within his competence and had the power and duty to take all necessary steps to ensure the smooth functioning of the Office, is immaterial. The question of a conflict of interest only arises if the official is competent. Accordingly, the question of competency is not an answer to a charge of a conflict of interest. Hence, the Administrative Council erred in not finding that the President had a conflict of interest in the matter. In this situation, in accordance with the provisions in force, the Administrative Council should have sent the matter back to the next most senior official to exercise authority instead of the President, who was precluded from exercising authority because of his conflict of interest.”

The ILO has therefore set aside the suspension decisions, and, in addition to ordering payment of lost pay plus interest, payment of moral damages (€25,000) and costs (€10,000), has ordered that “The complainant shall be immediately reinstated in his former post”.

The problem is, however, that Mr Corcoran has not been reinstated. As further reported by the Irish Times, when Mr Corcoran went to the EPO “last Thursday afternoon he was refused admission and was told the ILO’s judgments had not yet been implemented”.

This is however perhaps not as simple as it may appear. Because the appealed suspensions were not the end of the matter. The Administrative Council repeatedly sought, and failed to achieve, from the Enlarged Board of Appeal, a proposal for Mr Corcoran’s removal from office. That is the only manner, according to Article 23(1) of the European Patent Convention, that a Board of Appeal member can be sacked while in service. But Board of Appeal members are appointed for 5 years, and their appointment can be not renewed. Tucked away in the Report on the 152nd meeting of the Administrative Council of the European Patent Organisation (available here) from 28 and 29 June 2017 is the innocuous-looking paragraph:

“The Council also decided to reappoint 12 members of the Boards of Appeal, and not to reappoint any other person, hence following the reasoned opinion of the President of the Boards of Appeal. It further agreed to the procedure for designating the deputy of the President of the Boards of Appeal in the future, and took note of the intended procedure to handle after-service activities of former board members.”

The phrase “and not to reappoint any other person, hence following the reasoned opinion of the President of the Boards of Appeal” is understood by Merpel to mean that the new (and first-ever under the new arrangements for the governance of the Boards of Appeal) President of the Boards of Appeal has proposed Mr Corcoran’s non-reappointment and the Administrative Council has accordingly not reappointed him. This seems to leave him in legal limbo – if the EPO declines to readmit him, Mr Corcoran may have to appeal yet again to the ILO-AT in regard to this latest decision.

The EPO’s reputation continues to be tarnished by a number of employment disputes, of which this is only the most high profile. The IPKat hopes that under the next President (António Campinos, currently President of the EU IPO takes over as President of the EPO next year) a more orderly work environment conducive to the examination of patents will be established.

Please keep in mind the Comment Moderation Policy when you comment (use a pseudonym and be civil). Also, you can reach Merpel by email at merpel.ipkat@gmail.com.

Never Too Late 171[week ending Sunday 12 November] Düsseldorf Court of Appeal in SISVEL v Haier publishes "guidebook" to SEP litigation under Huawei/ZTE | Swiss Supreme Court weighs in on K = Na | Beware the special requirements of software protection in Brazil | The protection of vehicles using trade marks and registered designs - London Taxis vs Scooters | Who is going to win the big EU Commission SEP licensing battle - "use-based" or "licence to all"? | Is TRIPS preventing vulnerable countries from accessing basic drugs? The case of South Africa | The New Intellectual Property of Health | Research Handbook on Intellectual Property in Media and Entertainment | When the cutting edge technology passes you over: The "winner takes it all" (and it ain't your home town) | Can a film be released without mention of the name of its director? | Saturday Sundries | [week ending Sunday 19 November] Birss J in Accord v Research Corporation Technologies attempts to cut the red tape on the right to claim priority | Looking for answers on ANSERA | Speech from European Judges Forum: But Sir Robin, let's be frank, we will put (just to be short), in Milan the Central Court... | Special interview with Patricia Kelly, Director General of IP Australia | "Intellectual Property Arrangements: Productivity Commission Inquiry Report" | "Australian Government Response to the Productivity Commission Inquiry into Intellectual Property Arrangements" | When public domain works meet trade mark law: Norwegian Industrial Property Office applies EFTA Court’s judgment and dismisses applications to register Vigeland’s artworks as trademarks | Event report: The private copying exception and the compensation of harm in a dematerialised environment | How far away is global trade secrets protection? US industry's call to action as EUIPO analyzes baseline data | IPIB: How competitive is your IP service firm? | Erasing Kevin Spacey: performers' rights to the rescue? | Around the IP Blogs! | Sunday Surprises

Never Too Late 170[week ending Sunday 5 November] What future for UK copyright after Brexit? Report on IPKat-BLACA panel discussion | US patent litigation on the move again following In re Cray | Does the doctrine of equivalents apply to novelty? | Internet and Digital Media Law conference returns to London UNION-IP event: "IP - Past, Present and Future" |The Relevant Public and Likelihood of Confusion in Respect of Chinese Character Trademarks |GUI Goo for Chewy Chewing 1 How far to take user rights into consideration? Repair? | Bringing a counterclaim for patent revocation: not so fast in Singapore | SPC consultation - call for input |Linking in the US: is an embedded tweet an infringement of the public display right? |Katcall: Openings for GuestKats and InternKats! |Dutch Supreme Court in Merck v Teva holds that second medical use claims can be directly and indirectly infringed, no matter the type |The rise of "obvious to try" is over as Court of Appeal finds CIALIS dosage regimen patent obvious |Wednesday Whimsies| [week ending Sunday 29 October] Abanka DD v Abanca Corporacion Bancaria SA|IP Federation declares no role for IP disputes in proposed Hague Convention, while INTA takes a different approach | Book review: Grounds of the Immaterial - A Conflict-based Approach to Intellectual Property Rights |Teva v Gilead: Swiss court bashes ECJ on SPC "mess" | Book Review: Form in Intellectual Property Law | T 1201/14: EPC's substantive requirements for valid transfer of priority right surprisingly substantial | Qatar diplomatic crisis: “beIN Sports” and potential violations of the TRIPS Agreement – | Part 2 TV formats potentially eligible for copyright protection as dramatic works under UK law | Banner Universal Motion Pictures Ltd v Endemol Shine Group Ltd & Anor [2017]

Never Too Late 169[week ending Sunday 22 October] From Alicante to Munich - the EPO appoints its new President I Waldemar Haffkine: Pioneer of plague vaccine and the "Little Dreyfus Affair" Another German decision questions reasonableness of GS Media presumption if generally applied I Another German decision warns against broad application of GS Media presumption for for-profit link providers I Letter from AmeriKat: Trade secrets long arms, NDAs go bust and sharing of passwords I the AIPPI's World Congress in Sydney : Report 13, Report 12, Report 11, Report 10, Report 9, Report 8, Report 7, Report 6, Report 5, Report 4 I Book Review: EU Intellectual Property Law and Policy I Book review: Intellectual Property Rights and Climate Change: Interpreting the TRIPS Agreement for Environmentally Sound Technologies I Intellectual Property Rights and Climate Change – Interpreting the TRIPS Agreement for Environmentally Sound Technologies I A defensive non-assert? Philips v Asustek and HTC I Recommendation on measures to safeguard fundamental rights and the open internet in the framework of the EU copyright reform I BGH gifts shape mark owners sweet victories I Standards, patents and competition law conference I New episode of copyright mini-series 'The Game is on!'

Never Too Late 168[week ending Sunday 15 October] Book review--Create, Copy, Disrupt: India’s Intellectual Property Dilemmas | Freedom of Panorama: would it hurt architects? Survey among Italian-based architects says NO | The new unjustified threats bill – do's and dont’s| International Copyright Law returns to London| Retromark Volume II: the last six months in trade marks and Volume I| Book Review Times Two: GI at the Crossroads of Trade, Development, and Culture and GI - Global and Local perspectives|Does the retreat from internationalism mean the retreat of IP? |Event report: I3PM General Assembly 2017 at WIPO in Geneva |copyright and music

For Kat readers with an academic bent, the following public announcement about the 2018 Ladas Memorial Award competition may well be of interest.

“The International Trademark Association (INTA) is currently accepting submissions of original papers on trademark law or a matter that directly relates to, or affects, trademarks for its 2018 Ladas Memorial Award competition. INTA’s Ladas Memorial Award is an annual international competition that is open to both students and professionals. INTA will award the authors of the top two papers in the student category and the top paper in the professional category. These papers will be considered for possible publication in The Trademark Reporter (TMR), INTA’s legal journal; publication will be subject to the TMR Committee’s editorial review and approval.

The award was established in 1995 in memory of Stephen P. Ladas, a distinguished practitioner and author, and is funded by Ladas & Parry, LLP, a law firm with offices in New York, Chicago, Los Angeles, Washington, D.C., London, and Munich. According to INTA CEO Etienne Sanz de Acedo—

"INTA’s Ladas Memorial Award recognizes original scholarly works that address relevant, timely, and emerging issues in the field of trademark law. In honor of the late Stephen P. Ladas, we acknowledge both students’ and professionals’ contributions of thought leadership and research on matters that directly impact trademarks, and we provide an opportunity to increase exposure to their important work."

Pursuant to the official rules and requirements, the papers will be judged on the following criteria: nature, breadth, and timeliness of subject(s) addressed, originality of subject and of thought, extent of research and scholarship, and quality of writing. Eligible students must be enrolled as either full-time or part-time law or graduate students. Professional authors may be legal practitioners, business professionals, and/or academics.

The student winners will each receive U.S. $2,500 and complimentary registration to the 2018 INTA Annual Meeting, which takes place in May. The professional winner will receive a set of Stephen P. Ladas’s three-volume treatise, Patents, Trademarks, and Related Rights, and complimentary registration to the 2018 INTA Annual Meeting.

The deadline to submit a paper is January 19, 2018. INTA will announce the winners in March 2018. To submit a paper, visit here. Please contact ladasaward@inta.org with any questions.”

It would be great to read in March 2018 that the winner is also an avid IPKat reader.

Svaroski-Optik alleged three fundamental procedural defects. The first objection was dismissed by the EBO because it had not been raised in a timely and specific manner during the appeal proceedings (Rule 106).

With its second objection, Svaroski-Optik argued that the Board of Appeal had adopted, for the first time in the written grounds for the decision, an interpretation of a claim feature that had not been anticipated by either party. The Opposition Division had identified three distinguishing features of the invention over the closest prior art, telescope IOR-01 (prior public use). One of them was that the "subjective field of vision was at all zoom levels at least 22°". The Board of Appeal constructed the feature differently. According to the BoA, the feature only required a subjective field of vision of at least 22° at zoom levels of at least 4. Constructed like this, the feature was disclosed by the telescope IOR-01, which led to a new formulation of the problem to be solved (the dreaded - by patentees - "alternative embodiment of ...") and subsequently to a finding of lack of inventive step.

22° field of vision? No way!

Neither party had advanced such a claim construction or formulation of the objective problem during the entire proceedings. Since this construction was first advanced by the BoA in the written grounds for the decision, Svaroski-Optik could not have objected to it during the appeal proceedings, and the objection was raised in a timely manner in the petition for review (Rule 106, last part of sentence).

By adopting a surprising claim construction only in the written grounds, without giving the parties the opportunity to comment on it, the Board of Appeal had violated Svaroski-Optik's right to be heard. While it had been discussed whether a limitation of the zoom level of the telescope IOR-01 could lead to the above discussed feature without inventive step, the discussion did not occur in the context of claim construction and did not change the fact that the newly adopted claim construction was surprising.

Since the case was to be re-heard by the BoA anyway, the Enlarged Board of Appeal did not address the third objection.

A big thank you to KatFriend Heiko Sendrowski for alerting IPKat to the decision - in the pre-Christmas stress, it probably would have slipped our attention.

Monday, 11 December 2017

John E. Dubiansky, an attorney
advisor in the Federal Trade Commission’s Office of Policy Planning, will talk
on the subject of IP valuation and demystify a concept crucial to building markets
for intellectual property. Full details and registration here.

Call
for papers:

1. The New IP Lawyers network and
Exeter Law School are delighted invite you to their second conference in
intellectual property law, entitled ‘Intellectual property in transitions:
(Re)-imagining intellectual property’, on the 16th and 17th of
April 2018. The call for contribution for paper and panel
submissions is now open, the deadline for which is 24th January.
Full details here.

2. The Annual ISHTIP Workshop
takes place at the University of Roma Tre, from the 4th-6th July 2018 and it has
now opened its call for papers on the topic of Intellectual Property and
Heritage. The deadline for submission is 16 February 2018, full details here.

May the Copyright Games Begin!

3. Submissions are welcome for Icepops:
an international copyright-literacy event with playful opportunities for
practitioners and scholars. The event is devised by the UK Copyright Literacy team
- Chris Morrison and Jane Secker, and run in conjunction with the CILIP Information Literacy Group, together
with a helping paw from one of our Kats, Dr Hayleigh Bosher. The day includes keynote
speakers, a world café, an opportunity to play copyright games, and take
part in a copyright games hackathon. The event takes place on 3rd April 2018 at
the University of Liverpool, full details here.

Opportunities:

1. Are you Estonian, love IP and
are good at it? Then this ad may interest you. Professor
Derclaye is looking for a research assistant to help her with design
case law from Estonia. You should be fluent in English and Estonian and have done
at least one course on IP, so you can be a student at any level, or even a
practising lawyer. The work is of course remunerated, but at the University of
Nottingham student rate. Deadline: as soon as possible. If you’re interested,
you can send your CV directly to Prof. Derclaye at Estelle.derclaye@nottingham.ac.uk You
can of course contact her too if you’d simply like more information.

2. Africa University seeks to
appoint a suitably qualified professional as Professor/Associate Professor or
Senior Lecturer, within the College of Business, Peace, Leadership and
Governance at Africa University. The application deadline is 31 January 2018,
full details here.

3. The University of Southampton
Law School is recruiting a Research Fellow, to undertake legal research work
for a fixed term of 2 years, commencing January 2018, on a Horizon 2020 funded
research project on accelerating innovation services (Datapitch). The focus of the post will be to
provide consultative legal and ethical advice and analysis to the
interdisciplinary team in order to inform the development of the project
objectives. The closing date for applications is Tuesday 02 January 2018, full
details here.

In
other news:

The report Chartered Institute of Trade Mark Attorneys
(CITMA) publishes the Brexit business case. The report sets out why the rights of to
represent clients and businesses before the EUIPO is of paramount importance
and why those rights must continue after Brexit. The full business case - Trade marks, designs, business and Brexit: a
case for clarity, collaboration & concerted action - can be read and
downloaded here.

According to a press release from Friday, 8 December 2017, the German Federal Patent Court found Nestlé's German shape mark in the form of a "Nespresso" capsule invalid for coffee based on Article 3(2)(2) German Trade Mark Act, which corresponds to Article 4(1)(2)(ii) Trade Mark Directive ("signs which consist exclusively of the shape, or another characteristic, of goods which is necessary to obtain a technical result". The German act lacks the "another characteristic", which was added by Directive (EU) 2015/2436). The German court found that the essential characteristics of the mark conformed to (the drawings of...) German patent DE 27 52 733 (with a priority of 1976) and were all essential to obtain a technical result.

Figs. from DE 27 52 733

The written grounds for the decision are not yet available. One remark comes to mind: it is too simplistic to look at the drawings of a patent to conclude that a form has a technical effect. The drawings only show an embodiment of an invention, which is defined by the claims. There may be other shapes that achieve the same purpose - which is irrelevant under the ECJ's test (EU:C:2002:377 - Philips/Remington) - but there may also be elements of the specific embodiment that are not strictly necessary to obtain a technical result. In the case at hand the claims of DE 27 52 733 describe a specific shape of the capsule ("a body having an acute-angled conical shape, the larger diameter defining at its end a flange"), but the domed top part ("hat") of the capsule is not defined by claim 1 (it is claimed in a dependent claim). This led a Swiss court - where the alternative form test is applied also in trade mark law - to find that the overall shape of the Nespresso capsule was not necessary to obtain a technical result. The Swiss court, however, found that in the specific case, there was no legally relevant likelihood of confusion, because the only element of the shape that was not determined by technical necessity (the top or "hat") of the competitor's capsule was sufficiently distinct from the trade marked shape.

Shapes at issue in the Swiss case

Since the "alternative form" test is irrelevant under the ECJ's case law, the outcome of the case is hardly surprising, although the decision is likely to be appealed to the Federal Court of Justice given the stakes.

If the alternative form test was still alive in trade mark law, the case would raise the interesting question whether the interest to be compatible with the system of a market leader can justify a finding of technical necessity. There are other coffee-capsule-machines which use capsules that look different enough from the Nespresso-capsule as not to cause a likelihood of confusion (e.g., Lavazza's Aroma Point espresso capsules). Under the current interpretation of the law, this is irrelevant.

In today’s highly competitive markets, producers of consumer goods increasingly launch new marketing strategies, aimed at stimulating a broad array of sensory reactions, often based on innovative technologies. Consequently, the commercial appeal of non-traditional trademarks has increased, and IP law has been compelled to address the manifold challenges involved by their protection.

In the abstract, all kinds of signs can amount to trademarks, and atypical marks are a multi-faceted and lively reality. Just to make some famous examples among EU registrations, one can think of the lilac/violet colour of the packaging of Milka chocolate (colour trademark), McDonald’s jingle “I’m lovin’ it” (sound trademark) or the Nokia video of a handshaking displayed on mobile phones when switching on (motion trademark).

However, non-conventional trademarks present difficulties in relation to the fulfilment of the requirements for registration. In general, they have often been excluded from registration, or thereafter declared invalid, usually because either (i) the applicant or proprietor was unable to represent them graphically, (ii) they were found to lack distinctive character, and/or (iii) they were considered an indivisible part or feature of the product.

One of the major changes introduced by the recent EU Trademark Reform – pursuant to Regulation (EU) 2017/1001 (New Regulation) and Directive 2015/2436/EU (New Directive) – addresses the concept of sign capable of registration as a trademark. This directly impacts on the protection of atypical marks.

Graphical representation

The recent Reform abolished the original requirement of graphical representation of the sign. Starting from 1 October 2017, in order to be validly registered as a EU trade mark, the sign must still be capable of being represented, but any appropriate form of representation is admitted, as long as it “enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor” (Article 4, letter b), of the New Regulation). The corresponding provision in Article 3, letter b), of the New Directive will need to be transposed by Member States within January 14, 2019. Besides, another change introduced by the Reform is the express addition of colours and sounds to the exemplifying list of signs capable of being registered as trade marks (pursuant, again, to Article 4 of the New Regulation and Article 3 of the New Directive).

The requirement of graphical representation was conceived in order to define the mark and determine the precise scope of the protection afforded to its holder and, mirror-wise, of the rights of third parties. The Court of Justice of the European Union (CJEU) expressly connected the need for a clear and precise representation of the mark to that of legal certainty, not only towards the public and consumers, but likewise towards the authorities, as well as other economic operators. Reflecting the principles laid down by the CJEU in the Sieckmann judgment (12.12.2002, Case C-273/00), Recital (10) of the New Regulation and Recital (13) of the New Directive now provide that the trademark representation must be “clear, precise, self-contained, easily accessible, intelligible, durable and objective”.

The Commission Implementing Regulation (EU) 2017/1431 (Implementing Regulation), also applying as from 1 October 2017, points out that the introduction of technical alternatives to graphical representation may be afforded by new technologies (see Recital 6) and (in Article 3) sets out a series of technical rules for the representation of certain types of trademarks when filing an application before the European Union Intellectual Property Office (EUIPO).

For example, a multimedia mark (consisting of, or extending to, the combination of image and sound), must be represented “by submitting an audiovisual file containing the combination of the image and the sound” (Article 3.3, letter i), Implementing Regulation), while a hologram mark must be represented “by submitting a video file or a graphic or photographic reproduction containing the views which are necessary to sufficiently identify the holographic effect in its entirety” (letter j)). A table on the EUIPO website lists the most popular types of trademark, specifying their respective representation, whether a description is required and the format accepted by the Office from 1 October 2017.

What about smell, taste and tactile marks?

On the other hand, for certain “borderline” categories of atypical marks, the EU legal system seems not yet ready. Article 3.9 of the Implementing Regulation provides that the filing of a sample cannot constitute a proper representation, hence in practice impedes the registration, of smell, taste and tactile trade marks, because “the subject matter of protection cannot be determined with clarity and precision with generally available technology” (EUIPO Guidelines for Examination, Part B, Section 4, Chapter 2, Version of 01.10.2017). Actually, as specifically regards olfactory trade marks at EU level, the registration of “the smell of fresh cut grass” for tennis balls, filed in the nineties and then expired without renewal, altogether remained an isolated case.

What does the future hold?

On the whole, the EU Trademark Reform encourages the registration and protection of atypical trade marks, by “releasing” the representability requirement from its graphical declination. However, as some Italian legal literature recently observed, the requirement still applies in compliance with the demanding Sieckmann criteria, which continue to be referred to in the Recitals of the New Regulation as well as the New Directive.

Therefore, the impact that the Reform will have on non-conventional trademarks remains to be seen based on how the Courts and IP Offices, especially the CJEU and EUIPO, will implement the changes. A particular auspice among cutting-edge businesses, increasingly investing in scent marketing, seems to be that new methods of representation could be developed in the future with the progress of science, so that the evanescent, unstable nature of scent may then no longer prove an obstacle to registration.

In the agreement several provisions provided for standards that
Akzente had to comply with in order to preserve the high-end luxury
status of the brands covering the products of Coty: the décor, furnishing of the sales
location, the selection and presentation of goods, had to highlight
the luxury character of the brand.

In 2012, Coty decided to change
the terms of the agreement inter alia by providing that the
sales on the internet should henceforth be done in order to preserve
the luxurious character of the brand and through an “electronic
shop window” of the authorized store. Furthermore, the amended
agreement prevented the distributor from using, on the online
marketplace, a different business name or a third-party website
“discernible to the public”.

At Akzente’s attempt to sell goods
through “amazon.de”, Coty sought relief in the court of first
instance of Frankfurt am Main to prevent it from distributing the
goods on the online platform.

The Landsgericht found this clause to
the agreement to be in contrast with Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). The
Oberlandsgericht Frankfurt am Main, in evaluating Coty’s appeal,
referred the case to the CJEU,
essentially asking whether a selective distribution system primarily
established in order to ensure a luxury image preventing from selling
the products freely in the online marketplace is compatible with
Article 101(1) TFEU.

The Court's findings

On 6 December last the CJEU handed down its judgement, and held that a clause which,
in order to preserve the luxury image of an undertaking, prevents an
authorized distributor from using a third-party website discernible
to the public is not in violation of competition law, if the clause
complies with certain conditions.

The CJEU, in its reasoning, essentially
followed the Opinion issued by Advocate General Wahl (Kat Eleonora's report here).

The practical implications of this case are substantial, affecting
luxury brands and e-commerce as well as those online players that
are “discernible to the public”. Furthermore, this has also an
impact for trade mark owners of luxury goods.

The three main focus
points of this case are luxury goods, selective distribution
agreements and platform bans. The Court, together with the violation
of Article 101 TFEU, had to analyze whether the agreement in question
fell within the restrictions that remove the benefit of the Block
Exemption Regulation, namely territorial restrictions and a
restriction on passive sales. AG Wahl, in his Opinion, had held that the
jurisprudence of the Court to date indicates that the clause of the
agreement at hand would not be a restriction of competition on the
perspective of Article 101(1) and it is covered by the exceptions of
the Vertical Block Exemption Regulation (VBER).

Metro I
criteria

The Court held that the agreement would not be contrary to Art 101(1) TFEU if
the three criteria listed in the Metro I judgment are
applied, namely a selective distribution agreement for which (i) the
resellers are chosen on the basis of objective criteria of a
qualitative nature which are determined uniformly for all and applied
in a non-discriminatory manner for all potential resellers, (ii) the
nature of the product in question, including the prestige image,
requires selective distribution in order to preserve the quality of
the product and to ensure that it is correctly used, and (iii) the
criteria established do not go beyond what is necessary;

The scope of Pierre
Fabre

The Court finally
clarified the vexata quaestio of the scope of the Pierre
Fabre judgement: in that case the issue at stake was a blanket
ban on internet sales and here it was merely a decision to
selectively distribute Coty’s products online (exactly the same
result achieved through selective distribution done in brick-and-mortar shops). The Court further noted that with its decision in
Pierre Fabre it did not intend to set out a statement of principle
for which the preservation of luxury image cannot justify a
restriction of competition. Interestingly the court found that another
difference between the two cases is that there the products at stake were
cosmetic and personal hygiene goods and not luxury products. It could
be argued that cosmetic products can be luxury goods (as was also
established by previous Court jurisprudence for example here
and here and also by the desolation of Merpel's wallet when buying Kat make-up
and fur shampoo).

Trade mark case-law precedent

In its judgment, the
Court also relied on the principles established in Copad.
That case (covered by this blog here)
the Court held that the licensee would be liable for trade mark
infringement - and not only contractually liable - because the
contravention to the terms of the contract damaged the aura of luxury
and the allure of the brand.
A similar approach can be found in another trade
mark case, Coty
Prestige Lancaster Group(Coty
must just like the attention - says Merpel -) , where it was
held that using a trade mark contrary to the proprietor’s consent
amounts to breach of trade mark’s rights.

Certainly in Coty the
trade mark aspect does not arise per se, but the reasons at
the basis for the decision stand regardless. This is because what is
really at stake here is the image that certain companies want to
portray in the business world and this intangible property; their
aura of luxury, needs to be protected by trade mark and competition
law.

As AG Wahl stated in his Opinion, the object of competition law is not only to protect price competition but also
economic efficiency and the welfare of consumers of which the
optimization of the quality of goods is a sound basis for. This is
why allowances are made for selective distribution systems, in light
of maintaining “a high specialist trade capable of providing
specific services as regards high-quality and high-technology
products, which may justify a reduction of price competition in
favour of competition relating to factors other than price”. In
short: trade mark law to rule them all, trade mark law to bring them
all to justice and bind them (for the Lord of the Rings fans out there).

Lack of contractual
relationship

Another aspect that the Court
focused its attention on is the fact that the lack of a contractual
relationship between the supplier of the luxury goods and the
third-party platform could be problematic in case of enforcement.

The
Court underlined how a binding clause found in the authorized
distributor’s agreement could not be as effective as a direct
relationship between the supplier and the online platform. Obviously
this type of determination is best conducted on a case-by-case basis,
but it is not new to the Court: in L’Oréal
and others v eBay International, L’Oréal’s distributor
sold unpackaged perfumes through eBay, which L’Oréal successfully
argued being damaging to its luxury image, amongst other
considerations. From this follows the importance, underlined by the
Court in its judgement, for luxury brands to be able to check and
control the sale environment of their products.

Luxury Kat

Lack of
definition of luxury goods

The
definition of luxury goods is not found in the judgement. This is not
at all surprising since it was not a question asked to the Court. It
could be argued that not defining what luxury products are could
prompt companies to use the exception granted with this decision to
establish a selective distribution system and a platform ban. This is
perfectly possible at the companies' risk but first of all selective
distribution is not something all undertakings strive for or
something they can all afford. In addition, judgements based on the luxury
image and the high quality of goods have been around for many years,
in the field of competition law as well as that of trade marks. It
will nevertheless be interesting to see how the Court will develop
its jurisprudence in this sense.

E-commerce
sector inquiry final report

The Coty judgment also
confirms the findings of the European Commission in its final
report on the e-commerce sector inquiry which indicates that
“marketplace bans do not generally amount to a de facto
prohibition on selling online or restrict the effective use of the
internet as a sales channel irrespective of the markets concerned”.

With its decision the Court implicitly affirms that the market
ban, with all the trimmings illustrated above, does not amount to a
restriction by object. This type of clause: (1) does not limit the passive
sales of the distributors because they can still advertise the
products online and it is not possible to circumscribe third-party
platform customers; and (2) only restricts a specific
type of sale. In case the same situation will be dealt with but by a
non-luxury brand, then the analysis will have to be done on a case by
case basis (even though this Kat thinks that an argument by a
non-luxury brand could not hold)..

In
conclusion, this judgment is in line with the previous CJEU jurisprudence and policy as well as with the tenets of EU
competition. It is not to exclude, however, that with the evolution
of e-commerce and its rampant presence in the consumer’s life that
these issues will be dealt with differently in a few years’ time.

“Apply with a groundbreaking research idea to secure financial support for up to five years, working at an academic institution of your choice anywhere in the world” -- The complete information can be found here.

Recognizing the need to further advocate for strong IP protection and harmonization as Brexit negotiations unfold, the INTA Board of Directors approved a Brexit position paper at its meeting on 7 November last.

In the position paper, INTA submits that both the EU and UK should “support, promote, and safeguard the following core principles for brand owners and right-holders during the negotiations as well as when ‘Brexit’ becomes effective: minimal disruption of trade, minimum costs, maximum retention of rights, and maximum transparency and legal clarity.”

Data Protection Framework in the offing in India - Government seeks public comments

The Government of India is seeking comments on a draft White Paper on a proposed Data Protection Framework on principles to be considered for data protection in India to address the increasing concerns on secure digital transactions and data privacy.

Earlier this year, the Government constituted a Committee of Experts under the chairmanship of former Supreme Court Justice Shri B N Srikrishna to suggest a draft Data Protection Bill. The proposed White Paper intends to cover key principles like technology agnosticism and flexibility, applicability to both private sector and government entities, informed consent, data minimization, data controller’s accountability, penalties for wrongful processing and enforcement of data protection framework by a statutory authority.

The deadline for submitting the responses is 31 December 2017 through the Web Form available at here.

The AmeriKat's cousin, the Sand Cat, is as elusiveas understanding what the UK Governmentis actually going to do with respect of the CJEUpost-Brexit

The EU Justice Sub-Committee of the House of Lords' EU Committee will consider enforcement and dispute resolution post-Brexit as part of an inquiry launched Wednesday. The inquiry will focus on whether there is a continuing role of the CJEU post-Brexit and how EU law will be dealt with in national courts. Written comments are due by Friday, 19 January 2018.

Baroness Kennedy, the Chairman of the EU Justice Sub-Committee, stated that “The evidence that we received from four of the UK’s most senior former judges highlighted the dangers of legal uncertainty post Brexit.". Those four judges were:

who, on 21 November 2017 gave evidence to the Sub-Committee to help scope out the inquiry into the post-Brexit jurisdiction of the CJEU. An uncorrected version of the transcript of this oral evidence can be found here.

“It was apparent that the judges had significant concerns about the operation of ‘retained EU law’ in the UK under Clause 6 of the European Union (Withdrawal) Bill... In addition to concerns about the wide discretion that might be given to the judiciary to take what might be seen as ‘political’ decisions, it is also far from clear that the provisions relating to the interpretation of retained EU law under Clause 6 of the Bill allow for a smooth transition. The Bill was clearly not drafted with a transitional period in mind. It would preclude references to the Court of Justice of the European Union, and not require UK domestic courts to take account of post-Brexit EU law, despite the fact that the UK may continue to be effectively bound by EU law during the transitional period.”

Lord Thomas

Lord Thomas also raised the influence of the UK in law post-Brexit. This is one of the issues that the European Law Institute is working on (of which he is a member of the executive committee). He stated:

"...one of the very big issues that the Committee may wish to think about in due course is how we, in a relatively small jurisdiction set between two very large jurisdictions, the United States and the European Community, will have an influence on the fashioning of the law for this new marketplace once we leave the Community. It is quite a significant issue, because it is inconceivable that being a relatively small country interposed between many other large trading blocs we would have a regime that people would be very happy to go along with. Our better course is to try to influence the other regimes and hope that they produce some kind of overall uniformity.

This is a very, very large topic; it is the future development of our law that is sometimes lost sight of in the debate. We look to the past, but it is equally important to look to the future and how we mould our law, bearing in mind the small size of our jurisdiction in comparison to the United States and Europe."

The inquiry will address the following issues:

Whether there could be a role for the CJEU in the UK post-Brexit.

How the Government can deal with questions relating to EU law in the domestic
courts post-Brexit and during any period of transition (including the potential for
divergence between UK law and EU law).

The impact Brexit will have on the UK’s ability to influence the development of the law in other jurisdictions including the EU and the United States.

The potential impact of excluding the jurisdiction of the CJEU, both on UK domestic law and on securing a workable Withdrawal Agreement and any transitional arrangements under Article 50.

Whether anything can be learned from the EFTA Court model, or other alternative
models for dispute resolution.

The most appropriate method of enforcement and dispute resolution in respect of the Withdrawal Agreement and subsequent partnership arrangements with the EU.

If UK citizens should have a direct right of access to any new enforcement or dispute
resolution procedures (or whether there should be a reference procedure, as
currently exists with the CJEU).

The inquiry was launched prior to Friday morning's announcement of heads of agreement being agreed between the UK and EU negotiators during Phase 1 of the Article 50 negotiations. Paragraph 38 of the Joint Report summarizing the agreement states that with respect of rights for citizens established by Union law, "the UK courts shall...have due regard to relevant decisions of the CJEU after the specified date [i.e. at the time of the UK's withdrawal]..." and to "...establish a mechanism enabling UK courts or tribunals" to refer questions to the CJEU on those rights.

The AmeriKat's general feeling about the UKGovernment's preparations for a post-Brexit life

Paragraph 91 also states that on civil and commercial maters there needs to be "legal certainty and clarity". It provides that Union law should continue to govern conflict of laws for contractual and non-contractual matters should continue for contracts and damage occurring before the withdrawal date (i.e. Rome I and II Regulations). Paragraph 91 concludes:

"There was also agreement to provide legal certainty as to the
circumstances under which Union law on jurisdiction, recognition and enforcement of
judgements (sic) will continue to apply, and that judicial cooperation procedures should be
finalised."

This sounds like its pointing to the Brussels Regulation (recast). But, like with much of the Joint Report, it is what is not being said that is more interesting (and worrying) for us lawyers - be it of the IP persuasion or not.

The AmeriKat does not believe that Friday's announcement will undermine the Sub-Committee's inquiry. If anything, the agreement at paragraph 38 that the CJEU's case law would continue to be referred to and applied by domestic courts with respect of citizen rights created by Union Law post-Brexit demonstrates the importance of the inquiry. By analogy, intellectual property rights created by Union law should also be subject to the same fate. Further, as noted at paragraph 5 of the Joint Report, the agreement was made "[u]nder the caveat that nothing is agreed until everything is agreed". As such, the fence posts may well move again and could move in response to the House of Lord's inquiry during Phase 2 of the negotiations.

For us in IP, especially those interested in the Unified Patent Court, the House of Lord's inquiry may be an opportune moment to outline how IP rights owners and users would like to see the operation and collaboration of the UK's domestic courts and tribunals with those in Europe, including the application of Union law, post-Brexit.

Written evidence can be submittedhereCall of EvidencehereBrexit: enforcement and dispute resolution inquiry websitehereLords Select Committee websitehereTranscript of oral evidence on Jurisdiction of the EUhere

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